India Hotel Market Review - Vol 6

By On 20th August 2013

Horwath HTL have teamed up with STR Global to produce bi-annual market report updates on the Indian Hotel Market

“The first quarter was a major contributor to this decline – January was not a good month; falling demand was exacerbated by shortened effective working in end March due to the holidays. Q2 actually saw demand recovery in some markets, although at the cost of room rate.

  • Mumbai had 2.5 pts jump in Q2 occupancy, which led to 0.9 pts occupancy growth for the first half year; rates continued to suffer and were down 6.5% for the first half and with a larger 7% decline in Q2
  • Ahmedabad has had rate growth, up 4.3% in the first half, but accompanied by over 6 pts decline in occupancy so that RevPAR declined by 6.3%. Summer months have been soft, with occupancy declining by 7.1 pts in Q2
  • Kolkata grew RevPAR by 1.3% in Q1 mainly based on occupancy growth of 0.9 pts and unchanged ADR; but Q2 was poor with rate and occupancy decline contributing to 1.4% decline in RevPAR for the first half year
  • Jaipur struggled in Q1. January 13 occupancy was lower than even Jan 09 (which had declined sharply in the aftermath of Mumbai terror attacks); Feb and March occupancies were among the lowest in the last seven years. Clearly, the city suffered from supply growth and this is a concern considering several new projects are on the anvil and other developers continue to pursue Jaipur. Occupancy in June, on the other hand, was the highest ever, crossing into the forties – but one month in the summer cannot allay the concernsChennai, Hyderabad and Delhi NCR were deeply in the red – the first two were expected due to supply surge and political sentiment issues respectively. The extent of contraction in the third was a surprise. RevPAR declined 19% in Chennai; 13.9% in Delhi NCR and 10.4% in Hyderabad.

    In case of Chennai, occupancy declined by over 10 pts and ADR by 3.7%. The somewhat modest ADR decline is attributable to new supply being materially in the upscale and luxury positioning.

    RevPAR decline in Hyderabad was occupancy driven – decline of over 4.5 pts, drove H1 2013 occupancies below the 50% level. Occupancies since March 2013 have ranged between 43.3% and 49.3%. Half year ADR declined by 2.2%; ADR for March 2013 went below Rs. 5,000 for the first time since 2007.

    RevPAR decline in Delhi NCR, by nearly 1/7th, is a cause for concern particularly considering imminent large supply growth. We have segregated New Delhi and Gurgaon, from the rest of Delhi NCR, to gain a better picture. “

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